Gaily colored Christmas wrapping paper contains brain-damaging lead and cancer-causing chromjum and should be kept away from small children, landfills and fireplaces, according to a Rutgers University chemist in an interview yesterday.

Dr. Sidney A. Katz told the American Chemical Society recently that pigments used in 17 samples of gift wrap tested contained a variety of toxic metals, including copper and zinc as well as lead and chromium. He said the interview that some samples were one-tenth of one percent lead by weight, which meant that a child eating a piece of the paper 2 1/2 inches or her bloodstream to be diagnosed as having lead poisoning.

However, if no more lead is ingested there is not likely to be permanent damage, he said. Lead poisoning causes weakness, convulsions, brain damage, coma and ultimately death, but the effects of small lead dosages are still controversial.

The Gift Wrapping and Trying Association, whose 30 corporate members dominate the industry, said that the Katz study was not comprehensive and that levels of lead in its wrapping papers are nto harmful, "our members are aware of the study and aware that there is lead in all sorts of inks . . . including the colored inks in newspapers," said association spokesperson Jackie Jackson. "Certainly we're not manufacturing gift wrap to kill little children."

Katz noted that there are no regulations on use or disclosure of toxic metal content in paper pigments. Some manufacturers, including Hallmark Cards Inc., which leads the field with over 200 wrapping paper designs, describe their products as lead-free, but Katz said the assertions have not been fully tested.

Katz said he collected samples by asking friends and neighbors to save gift wrap last Christmas, and so did not know which manufacturers or brand names he wast testing. His tests, he said, involved printed and solidcolor papers but now any metallic varieties.

He found red-lead, yellow lead chromate and yellow zinc chromate in 15 of the 17 samples tested. Some contained various iron and copper compounds as blue pigments, or combinations of the blues and the lead chromate to form green he said. Concentrations of chromium, which is known to cause cancer in laboratory animals, were about one-fourth the level of lead, the report showed.

The metals can be released to the air by burning, Katz continued, and so disposal of Christmas wrap in the family fireplace should be avoided. "In a fireplace, the initial draft comes into the room as the fire is being lit, so airborne lead levels could be quite high for a short period of time," Katz said.

Disposal by burial in a sanitary landfill may not be a good idea either, he continued. His experiment simulated the slightly acidic water conditions of landfills in New Jersey and found that the metals leached easily and rapidly out of the papers.

Lead concentrations from more than half the samples tested, Katz said, were "well above the limits for potable water established by the Safe Drinking Water Act." Copper and zine, which are also toxic, were leached out in similar prohibited concentrations under the same mild conditions.

New Jersey has been fighting a continuing battle against industrial and other pollutants which have leached into its groundwater and then into municipal water supplies from abandoned quarries that are being used increasingly for landfills. The state's anti-burning law has put a primium on suitable disposal sits, but the problem is spreading nationwide as old dumps fill up.

Katz hopes his findings will spur the gift wrap industry to follow the example of a number of comic book manufacturers who switched to leadfree pigment after a similar study found toxic metal sin the funnies. He said he would buy Christmas wrap in January - "after the prices go down" - and compare it with wrap purchased next December for a future followup report.

The Consumer Product Safety Commission is preparing an attempt to duplicate Katz's findings, according to a spokesperson.

"In all honesty," Katz said, "wrapping paper is a minor source of lead exposure now that we've eliminated leaded gasoline. But since lead is with us forever we don't need any at all.

"The best thing" to do with old Christmas wrapping paper, he said, "is to pack it into a plastic bag and let the sanitation department dispose of it."